I did love the last part you highlighted about the ATSB loan. You do know that US renegotiated those terms 3 times during the course of BK2 don't you? Including the provision that 100% of the proceeds of any sale of assets was to go toward payments on the loan. That's how the minimum cash balance required was reduced 60% and the sale of the 170's/slots brought in cash that was used to keep the doors open till the merger.
Jim
Jim,
I'm sure Doug "The Closer" can tell you all about this Memo and possibly provide you with an original copy, if you don't know who he is, maybe someone's nephew can help you get in touch with him.
The Swan
Merger Mania July 22 2005
Pieces of the Puzzle
Capt. Ken Stravers, Chairman, MEC Merger Committee
Last Friday, July 15, your MEC and chairmen of the Merger, Negotiating, and Communications Committees met with Doug Parker, Jeff McClelland, Dave Seymour, and Shirley Kaufmann from America West management. DougParker opened the meeting with an hour-and-15- minute presentation.
He provided us financial data concerning our current company position, as well as future projections for the merger of both companies. These cost savings, or synergies, are predicated on this deal being handled in an expeditious manner. Your MEC followed this presentation with an hour and 45 minutes of questions concerning merger, operations, and management style with the new company. Nondisclosure agreements signed by all in attendance preclude us from releasing any details at this time. However, as we receive additional information that we have requested from the company, we’ll form a well-educated decision about the implications of this merger for AWA pilots.
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I think the pressures and risks are all on your side of the transaction, not the US Airways side. Here are my thoughts.
The judge who has been sheparding US Airways along for the last three years and two bankruptcies will not let it collapse.
Second, I believe that the company can operate without a transition agreement, but you can’t.
You have scope protections, but keep in mind that the new company will be US Airways and will be flying under its certificate. While the two companies remain separate, there will be little to restrict the company from shifting flying from AWA to AAA or from allowing all the new flying to AAA without a transition agreement keeping flying separate.
Memo from West Merger Attorney Jeffrey Freund to the AWA ( JRB, JMac & KS ) August 2005.
I’ve been thinking about the status of the Transition agreement and its implications for seniority integration and I wanted to pass these thoughts on to you before the MEC decides how to proceed. I believe that it is very important that you finalize an agreement and do it soon. I think the pressures and risks are all on your side of the transaction, not the US Airways side. Here are my thoughts.
First, whatever you may think about the transaction, I believe that it will be approved and approved promptly. The judge who has been sheparding US Airways along for the last three years and two bankruptcies will not let it collapse. In any event, it will not be ALPA’s objection (assuming you don’t reach a transition agreement and ALPA files an objection) that will kill it. So you should assume it will promptly be approved.
Second, I believe that the company can operate without a transition agreement, but you can’t. You have scope protections, but keep in mind that the new company will be US Airways and will be flying under its certificate. While the two companies remain separate, there will be little to restrict the company from shifting flying from AWA to AAA or from allowing all the new flying to AAA without a transition agreement keeping flying separate.
Third, the implications of that fact to seniority integration are not good. If flying tips to AAA during the transition period, even if we get a “good” integration, AAA pilots will be in seats and a “no bump/no flush” provision will keep them there until a system bid allows seniority to operate unrestricted. That is not a good result for AWA pilots.
Fourth, in an event, as I have explained, to the extent your objections are to the absence of a no furlough clause, I don’t think you will ever get one and I don’t think you want one. You should want AAA pilots furloughed…
Finally, while I know you are trying to capture some additional economics, in these negotiations, this is not the time to draw the line on those issues. You will have other points of leverage during subsequent negotiations to press for those items. I’m not suggesting that you abandon your attempts immediately, just don’t get yourselves in a negotiating position where the deal craters over those issues. In short, I think you should not come out of the next round with the company without a deal.
Dan Atkins and I are intending to be at the meeting by conference call on Wednesday. Please let us know how and when we should do that.